Flash Eurozone PMI: Has Europe Passed The Worst?

Dec. 18, 2011 7:32 AM ETby: Prieur du Plessis

The Markit Flash Eurozone Composite PMI improved to 47.9 from 47.0 in November. The Flash Services PMI increased to 48.3 from 47.5, while the Flash Manufacturing PMI rose to 46.9 from 46.4 in November.

Germany’s services sector is growing again with its Flash Services PMI at 52.7 after a near stagnating 50.3 in November. The contraction in Germany’s manufacturing sector eased a bit, with the Flash Manufacturing PMI up 0.2 points to 48.1. The Flash Composite PMI for Germany rose above the 50 level again, indicating that the economy has resumed growth.

In France, the services sector is showing signs of growth, with the Flash Services PMI improving to 50.2 from 49.6. The contraction in the country’s manufacturing sector has eased considerably, with the Flash Manufacturing PMI improving to 48.7 from 47.3 in November. The Flash Composite PMI for France of 49.8 indicates that the contraction in the country’s private sector has eased significantly.

The GDP-weighted PMI (services and manufacturing combined) I calculate for the Eurozone followed that of the IFO Germany Business Expectations. The latter leads the former by one month.

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Sources: Dismal Scientist; Markit; Plexus Asset Management.

The eurozone GDP-weighted PMI indicates that the private sector in the eurozone is contracting in the final quarter of the year, but GDP growth is likely to be positive on a year-ago basis, thanks to government consumption and expenditure.

Click to enlarge:

Sources: Markit; Plexus Asset Management

Is this the bottom of the down-cycle of the eurozone economy? It’s hard to say, but there is definitely a glimmer of light at the end of the tunnel.

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